It was a lackluster end to the week last week. GBP/USD was steady for most of the day on Friday, trading just above the 1.34 figure for a lot of it. Without much in the way of major economic data, markets were more concerned about what the G7 meeting might bring. The conference itself was civil, but events since have been anything but as the US Government and critical allies continue their war of words on trade. In fact, some of it has been verging on getting personal, with Trump most recently tweeting that Canadian PM Trudeau “acts hurt when called out.”
With this, risk sentiment took a hit early on this morning, and commodity currencies gapped lower when markets opened. Since then, the greenback has weakened, and GBP/USD is pushing higher in London, and so it seems the G7 spat is being shrugged off ahead of a particularly important and data-heavy week this week.
Overnight we had UK Manufacturing Production, followed by UK average earnings and employment data at the same time tomorrow. US CPI (inflation) tomorrow afternoon, UK CPI on Wednesday morning and the UK and US Retail Sales on Thursday. Not to mention the ECB meeting on Thursday, at which point we expect to get more details on a plan to taper QE, the US FOMC meeting on Wednesday, at which the Fed is expected to raise interest rates, and the US/North Korea meeting; possibly laying the groundwork for ending a nuclear stand-off between the old foes. It all makes for a potentially volatile next few days.